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                                                                   EXHIBIT 10.13


                           CROSS TIMBERS OIL COMPANY
              MANAGEMENT GROUP EMPLOYEE SEVERANCE PROTECTION PLAN


     WHEREAS, the Board of Directors of Cross Timbers Oil Company, a Delaware
corporation ("the Company") recognizes that the current business environment
makes it difficult to attract and retain highly qualified employees unless a
certain degree of security can be offered to such individuals against
organizational and personnel changes which frequently follow a Change in Control
(as defined below) of a corporation; and

     WHEREAS, even rumors of acquisitions or mergers may cause employees to
consider major career changes in an effort to ensure financial security for
themselves and their families; and

     WHEREAS, the Company desires to ensure fair treatment of its employees, and
employees of certain subsidiaries of the Company which adopt this Plan as
Participating Employers in the event of a Change in Control and to allow them to
make critical career decisions without undue time pressure and financial
uncertainty, thereby increasing their willingness to remain with their Employer
notwithstanding the outcome of a possible Change in Control transaction; and

     WHEREAS, the Company recognizes that its employees and employees of
Participating Employers will be involved in evaluating or negotiating any
offers, proposals or other transactions which could result in a Change in
Control of the Company and believes that it is in the best interest of the
Company and its stockholders for such employees to be in a position, free from
personal financial and employment considerations, to assess objectively and
pursue aggressively the interests of the Company and its stockholders in making
these evaluations and carrying on such negotiations; and

     WHEREAS, the Board of Directors of the Company believes it is essential to
provide such employees with compensation arrangements upon a Change in Control
of the Company which provide such employees with individual financial security
and which are competitive with those of other corporations, and in order to
accomplish these objectives, the Board has caused the Company to adopt this
Plan.

     NOW, THEREFORE, in order to fulfill the above purposes, the following plan
has been developed and is hereby adopted.

                                   ARTICLE I
                             ESTABLISHMENT OF PLAN

     As of the Effective Date, the Company hereby establishes a severance
compensation plan known as the Cross Timbers Oil Company Management Group
Employee Severance Protection Plan, as set forth in this document.

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                                  ARTICLE II
                                  DEFINITIONS

     As used herein, the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.

     2.1  Base Salary.  The amount a Participant is entitled to receive as wages
or salary on an annualized basis, calculated immediately prior to a Change in
Control.

     2.2  Board.  The Board of Directors of the Company.

     2.3  Bonus Amount.  An amount equal to the greater of a Participant's two
most recent bonuses awarded on or prior to the date of the Participant's
termination of employment under the Key Management Incentive Bonus Plan adopted
by the Company (or any other bonus plan or program then in effect), multiplied
by two.

     2.4  Cause.  An Employer shall have "Cause" to terminate a Participant if
the Participant (i) willfully and continually fails to substantially perform his
duties with the Employer (other than a failure resulting from the Participant's
incapacity due to physical or mental illness) which failure continues for a
period of at least thirty (30) days after a written notice of demand for
substantial performance has been delivered to the Participant specifying the
manner in which the Participant has failed to substantially perform, or (ii)
willfully engages in conduct which is demonstrably and materially injurious to
the Employer, monetarily or otherwise; provided, however, that no termination of
the Participant's employment shall be for Cause until (x) there shall have been
delivered to the Participant a copy of a written notice specifying in detail the
particulars of the Participant's conduct which violates either (i) or (ii)
above, (y) the Participant shall have been provided an opportunity to be heard
by the Board (with the assistance of the Participant's counsel if the
Participant so desires), and (z) a resolution is adopted in good faith by two-
thirds (2/3) of the Board confirming said violation.  No act, nor failure to
act, on the Participant's part, shall be considered "willful" unless he has
acted or failed to act with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the
Employer.  Notwithstanding anything contained in this Plan to the contrary, no
failure to perform by the Participant after Notice of Termination is given by or
to the Participant shall constitute Cause.

     2.5  Change in Control.  A "Change in Control" shall mean any one of the
following:

          (a) "Continuing Directors" no longer constitute a majority of the
     Board; the term "Continuing Director" means any individual who is a member
     of the Board on the date hereof or was nominated for election as a director
     by, or whose nomination as a director was approved by, the Board with the
     affirmative vote of a majority of the Continuing Directors;

          (b) any person or group of persons (as defined in Rule 13d-5 under the
     Securities Exchange Act of 1934, as amended ("Rule 13d-5")) together with
     his or its affiliates, 

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     becomes the beneficial owner, directly or indirectly, of 25% or more of the
     voting power of the Company's then outstanding securities entitled
     generally to vote for the election of the Company's directors;

          (c) the merger or consolidation of the Company with any other entity
     if the Company is not the surviving entity and any person or group of
     persons (as defined in Rule 13d-5), together with his or its affiliates, is
     the beneficial owner, directly or indirectly, of 25% or more of the
     surviving entity's then outstanding securities entitled generally to vote
     for the election of the surviving entity's directors; or

          (d) the sale of all or substantially all of the assets of the Company
     or the liquidation or dissolution of the Company.

     Notwithstanding the foregoing provisions of this Section 2.5, if a
Participant's employment with the Employer is terminated by the Employer other
than for "Cause" prior to the date on which a Change in Control occurs, and it
is reasonably demonstrated that such termination (i) was at the request of a
third party who has taken steps reasonably calculated to effect a Change in
Control or (ii) otherwise arose in connection with a Change in Control, then for
all purposes hereof, such termination shall be deemed to have occurred
immediately following a Change in Control.

     Notwithstanding anything herein to the contrary, under no circumstances
will a change in the constitution of the board of directors of any Subsidiary, a
change in the beneficial ownership of any Subsidiary, the merger or
consolidation of a Subsidiary with any other entity, the sale of all or
substantially all of the assets of any Subsidiary or the liquidation or
dissolution of any Subsidiary constitute a "Change in Control" under this Plan.

     2.6  Company.  Cross Timbers Oil Company, a Delaware corporation.

     2.7  Effective Date.  The date the Plan is approved by the Board of
Directors of the Company, or such other date as the Board shall designate in its
resolution approving the Plan.

     2.8  Employer.  The Company and any Subsidiary of the Company which adopts
this Plan as a Participating Employer.  With respect to a Participant who is not
an employee of the Company, any reference under this Plan to such Participant's
"Employer" shall refer only to the employer of the Participant, and in no event
shall be construed to refer to the Company as well.

     2.9  Good Reason.  "Good Reason" shall mean the occurrence of any of the
following events or conditions:

          (a) a change in the Participant's status, title, position or
     responsibilities (including reporting responsibilities) which, in the
     Participant's reasonable judgment, represents a substantial reduction of
     the status, title, position or responsibilities as in effect immediately
     prior thereto; the assignment to the Participant of any duties or
     responsibilities which, in the 

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     Participant's reasonable judgment, are inconsistent with such status,
     title, position or responsibilities; or any removal of the Participant
     from, or failure to reappoint or reelect him to, any of such positions,
     except in connection with the termination of his employment for Cause,
     Permanent Disability, or as a result of his death, or by the Participant
     other than for Good Reason;

          (b) a reduction in the Participant's annual base salary as in effect
     on the date of a Change in Control or as the same may be increased from
     time to time thereafter;

          (c) the Employer's requiring the Participant (without the consent of
     the Participant) to be based at any place outside a twenty-five (25) mile
     radius of his place of employment immediately prior to a Change in Control,
     except for reasonably required travel on the Employer's business which is
     not materially greater than such travel requirements prior to the Change in
     Control, or, in the event the Participant consents to any relocation beyond
     such 25-mile radius, the failure by the Employer to pay (or reimburse the
     Participant) for all reasonable moving expenses incurred by him relating to
     a change of his principal residence in connection with such relocation and
     to indemnify the Participant against any loss (defined as the difference
     between the actual sale price of such residence and the higher of (a) his
     aggregate investment in such residence or (b) the fair market value of such
     residence as determined by a real estate appraiser designated by the
     Participant and reasonably satisfactory to the Employer) realized on the
     sale of the Participant's principal residence in connection with any such
     change of residence;

          (d) the failure by the Employer to provide the Participant with
     compensation and benefits at least equal (in terms of benefit levels and/or
     reward opportunities) to those provided for under each employee benefit
     plan, program and practice as in effect immediately prior to the Change in
     Control (or as in effect following the Change in Control, if greater),
     including, but not limited to, the Company's 1991 Stock Incentive Plan, the
     1994 Stock Incentive Plan, the 1997 Stock Incentive Plan, Key Management
     Incentive Bonus Plan, the Cross Timbers Oil Company Employees' 401(k) Plan,
     and any other stock option plan, pension plan, life insurance plan, health
     and accident plan or disability plan;

          (e) any material breach by the Employer of any provision of this Plan;

          (f) any purported termination of the Participant's employment for
     Cause by the Employer which does not otherwise comply with the terms of
     this Plan;

          (g) Any failure of the Company to obtain the assumption of, or the
     agreement to perform, this Agreement by any successor as contemplated in
     Article VII;

          (h) Any termination of employment by the Company's Chief Executive
     Officer or President for any reason (other than death or Permanent
     Disability) during the thirty (30)-day period beginning on the 91st day
     after the date on which a Change in Control occurs;

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          (i) Any termination of employment by the Company's Executive Vice
     Presidents or Senior Vice Presidents for any reason (other than death or
     Permanent Disability) during the thirty (30)-day period beginning on the
     181st after the date on which a Change in Control occurs; or

          (j) Any termination of employment by the Participant other than the
     Company's Chief Executive Officer, President, Executive Vice Presidents, or
     Senior Vice Presidents for any reason (other than death or Permanent
     Disability) during the thirty (30)-day period beginning on the first
     anniversary of the date on which a Change in Control occurs.

     2.10 Management Group Employee. Each employee of the Employer who has been
designated by his Employer as a "Management Group Employee."

     2.11 Notice of Termination. A notice which indicates the specific 
provisions in this Plan relied upon as the basis for any termination of 
employment which sets forth in reasonable detail the facts and circumstances 
claimed to provide a basis for termination of the Participant's employment under
the provision so indicated; no purported termination of employment shall be 
effective without such Notice of Termination.

     2.12 Participant. A Participant who meets the eligibility requirements of 
Article III.

     2.13 Participating Employer. A Subsidiary of the Company which adopts this 
Plan in accordance with Section 8.4 below.

     2.15 Permanent Disability. If, as a result of the Participant's incapacity 
due to physical or mental illness, the Participant shall have been absent from 
his duties with the Employer on a full time basis for one hundred eighty (180) 
consecutive business days, and within thirty (30) days after written Notice of
Termination is given, the Participant shall not have returned to the full time 
performance of his duties, the Employer may terminate the Participant's 
employment for "Permanent Disability".

     2.16 Severance Benefit. The benefit payable in accordance with Article IV 
of the Plan.

     2.17 Subsidiary. Any subsidiary of the Company, and any wholly or partially
owned partnership, joint venture, limited liability company, corporation and 
other form of investment by the Company.

     A pronoun or adjective in the masculine gender includes the feminine 
gender, and the singular includes the plural, unless the context clearly 
indicates otherwise.

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                                  ARTICLE III
                         ELIGIBILITY AND PARTICIPATION

     3.1  Participation. Each Management Group Employee shall automatically 
become a Participant in the Plan as of the Effective Date, or the date he 
satisfies the definition of a Management Group Employee, whichever occurs later.

     3.2  Duration of Participation. A Participant shall cease to be a 
Participant in the Plan upon the first to occur of: (i) the date he ceases to be
a Management Group Employee of the Employer at any time prior to a Change in 
Control, (ii) the date his employment is terminated following a Change in 
Control under circumstances where he is not entitled to a Severance Benefit 
under the terms of this Plan, or (iii) the date on which he has received all of 
the benefits to which he is entitled under this Plan.

                                  ARTICLE IV
                              SEVERANCE BENEFITS

     4.1  Right to Severance Benefit.

          (a) A Participant shall be entitled to receive from the Employer a
     Severance Benefit in the amount provided in Section 4.2 if (i) a Change in
     Control has occurred and (ii) within two years thereafter, the
     Participant's employment with the Employer terminates for any reason other
     than (A) termination by the Employer for Cause, (B) termination by reason
     of Permanent Disability, (C) termination by the Participant for other than
     Good Reason, or (D) termination by reason of the Participant's death.

          (b) Notwithstanding any other provision of the Plan, the sale,
     divestiture or other disposition of a Subsidiary, shall not be deemed to be
     a termination of employment of employees employed by such Subsidiary, and
     such employees shall not be entitled to benefits from the Company or any
     Participating Employer under this Plan as a result of such sale,
     divestiture, or other disposition, or as a result of any subsequent
     termination of employment.

     4.2  Amount of Severance Benefit. If a Participant's employment is 
terminated in circumstances entitling him to a Severance Benefit as provided in 
Section 4.1, such Participant shall be entitled to the following benefits:

          (a) The Employer shall pay to the Participant, as severance pay and in
     lieu of any further salary for periods subsequent to the Termination Date
     (as specified in Section 5.2), in a single payment within ten (10) days
     after his Termination Date (without any discount for accelerated payment),
     an amount in cash equal to:

          (i) for the Company's Chief Executive Officer and President, three (3)
              times the sum of (A) the Participant's Base Salary and (B) the
              Bonus Amount;

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         (ii)  for the Company's Executive Vice Presidents and Senior Vice
               Presidents, two and one-half (2 1/2) times the sum of (A) the
               Participant's Base Salary and (B) the Bonus Amount;

         (iii) for all other officers of Employers, two (2) times the sum of (A)
               the Participant's Base Salary and (B) the Bonus Amount; and

         (iv)  for all other Management Group Employees, one and one-half (1.5)
               times the sum of (A) the Participant's Base Salary and (B) the
               Bonus Amount.

         (b)   For a period of eighteen (18) months subsequent to the 
     Participant's termination of employment, the Employer shall at its expense
     continue on behalf of the Participant and his dependents and beneficiaries,
     all medical, dental, vision, and health benefits and insurance coverage
     which were being provided to the Participant at the time of termination of
     employment. The benefits provided in this Section 4.2(b) shall be no less
     favorable to the Participant, in terms of amounts and deductibles and costs
     to him, than the coverage provided the Participant under the plans
     providing such benefits at the time Notice of Termination is given. The
     Employer's obligation hereunder to provide a benefit shall terminate if the
     Participant obtains comparable coverage under a subsequent employer's
     benefit plan. For purposes of the preceding sentence, benefits will not be
     comparable during any waiting period for eligibility for such benefits or
     during any period during which there is a preexisting condition limitation
     on such benefits. The Employer also shall pay a lump sum equal to the
     amount of any additional income tax payable by the Participant and
     attributable to the benefits provided under this subparagraph (b) at the
     time such tax is imposed upon the Participant. In the event that the
     Participant's participation in any such coverage is barred under the
     general terms and provisions of the plans and programs under which such
     coverage is provided, or any such coverage is discontinued or the benefits
     thereunder are materially reduced, the Employer shall provide or arrange to
     provide the Participant with benefits substantially similar to those which
     the Participant was entitled to receive under such coverage immediately
     prior to the Termination Notice. At the end of the period of coverage set
     forth above, the Participant shall have the option to have assigned to him
     at no cost to the Participant and with no apportionment of prepaid
     premiums, any assignable insurance owned by the Employer and relating
     specifically to the Participant, and the Participant shall be entitled to
     all health and similar benefits that are or would have been made available
     to the Participant under law.

          (c)  The Employer shall transfer to the Participant all right, title 
     or other ownership interest it may have in any automobile then being
     provided by the Employer for use by the Participant.

          (d)  The Employer shall transfer to the Participant any right, title 
     or ownership in any club memberships provided by the Employer for use by
     the Participant.

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          (e) The Employer shall transfer to the Participant any right, title or
     ownership in any life insurance owned by the Employer on the Participant's
     life.

          (f) Notwithstanding any provision to the contrary in any stock option
     agreement, restricted stock agreement, or other agreement relating to
     equity-type compensation that may be outstanding between the Participant
     and the Employer, all units, stock options, incentive stock options,
     performance shares, and stock appreciation rights (under the 1991 Stock
     Incentive Plan, the 1994 Stock Incentive Plan, the 1997 Stock Incentive
     Plan, or any other plan or arrangement) then held by the Participant shall
     immediately become 100% vested and exercisable, and the Participant shall
     become 100% vested in all shares of restricted stock held by or for the
     benefit of the Participant; provided, however, that to the extent the
     Employer is unable to provide for such acceleration of vesting, the
     Employer shall provide in lieu thereof a lump-sum cash payment equal to the
     difference between the total value of such outstanding units, stock
     options, incentive stock options, performance shares, stock appreciation
     rights and shares of restricted stock (the "stock rights") as of the date
     of the Participant's termination of employment and the total value of the
     stock rights in which the Participant is vested as of the date of his
     termination of employment.  The value of such accelerated vesting in the
     Participant's stock rights shall be determined by the Board in good faith
     based on a valuation performed by an independent consultant selected by the
     Board.

          (g) Notwithstanding any provision to the contrary in any stock option
     agreement that may be outstanding between the Participant and the Employer,
     the Participant's right to exercise any previously unexercised options
     under any such stock option agreement shall not terminate until the latest
     date on which the option granted under such agreement would expire under
     the terms of such agreement but for the Participant's termination of
     employment; provided, however, that to the extent the Employer is unable to
     provide for the extension of the expiration date of such options, the
     Employer shall provide in lieu thereof a lump-sum cash payment equal to the
     value of such extension the Employer is unable to provide.  Such values of
     such accelerated vesting and exercisability shall be determined by the
     Board in good faith based on a valuation performed by an independent
     consultant selected by the Board.

          (h) A Participant who is entitled to severance benefits under an
     employment agreement with the Employer may elect, in writing within ten
     (10) days after his Termination Date, to receive the severance benefits
     provided under this Section 4.2 in lieu of, but not in addition to, such
     other severance benefits as may be provided by such other agreement.  In
     the event that no election is made, the Participant shall forego his right
     to receive the severance benefits provided under this Section 4.2.

     4.3  Mitigation or Set-off of Amounts Payable Hereunder.   The Participant
shall not be required to mitigate the amount of any payment provided for in this
Article IV by seeking other employment or otherwise, nor shall the amount of any
payment provided for in this Article IV be reduced by any compensation earned by
the Participant as the result of employment by another employer after the
Termination Date, or otherwise.  The Employer's obligations hereunder also shall

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not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Employer may have against the Participant.

     4.4  Company Guarantee of Severance Benefit.  In the event a Participant
becomes entitled to receive from the Employer a Severance Benefit under Section
4.1 above and such Employer fails to pay such Severance Benefit, the Company
shall assume the obligation of such Employer to pay such Severance Benefit.  In
consideration of the Company's assumption of the obligation to pay such
Severance Benefit provided under this Plan, the Company (as the source of
payment of benefits under the Plan) shall be subrogated to any recovery
(irrespective of whether there is recovery from the third party of the full
amount of all claims against the third party) or right to recovery of either a
Participant or his legal representative against the Employer or any person or
entity.  The Participant or his legal representative shall cooperate in doing
what is reasonably necessary to assist the Company in exercising such rights,
including but not limited to notifying the Company of the institution of any
claim against a third party and notifying the third party and the third party's
insurer, if any, of the Company's subrogation rights.  Neither the Participant
nor his legal representative shall do anything after a loss to prejudice such
rights.

     In its sole discretion, the Company reserves the right to prosecute an
action in the name of the Participant or his legal representative against any
third parties potentially liable to the Participant. The Company shall have the
absolute discretion to settle subrogation claims on any basis it deems warranted
and appropriate under the circumstances.  If a Participant or his legal
representative initiates a lawsuit against any third parties potentially liable
to the Participant, the Company shall not be responsible for any attorney's fees
or court costs that may be incurred in such liability claim.

     The Company shall be entitled, to the extent of any payments made to or on
behalf of a Participant or a dependent of the Participant, to be paid first from
the proceeds of any settlement or judgment that may result from the exercise of
any rights of recovery asserted by or on behalf of a Participant or his legal
representative against any person or entity legally responsible for the injury
for which such payment was made.  The Company shall be reimbursed by the
Participant or his legal representative an amount of money equal to all sums
paid by the Employer under the Plan to or on behalf of the Participant and all
expenses, costs and attorney's fees incurred by the Company in connection with
the prosecution and collection of the Company's subrogation interest.  The right
is also hereby given the Company to receive directly from the Employer or any
third party(ies), attorney(s) or insurance company(ies) an amount equal to the
amount paid to or on behalf of the Participant.

                                   ARTICLE V
                           TERMINATION OF EMPLOYMENT

     5.1  Written Notice Required.  Any purported termination of employment,
either by the Employer or by the Participant, shall be communicated by written
Notice of Termination to the other.

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     5.2  Termination Date.  In the case of the Participant's death, the 
Participant's Termination Date shall be his date of death. In all other cases, 
the Participant's Termination Date shall be the date specified in the Notice of 
Termination subject to the following:

          (a) If the Participant's employment is terminated by the Employer for
     Cause or due to Permanent Disability, the date specified in the Notice of
     Termination shall be at least thirty (30) days from the date the Notice of
     Termination is given to the Participant, provided that in the case of
     Permanent Disability the Participant shall not have returned to the full-
     time performance of his duties during such period of at least thirty (30)
     days; and

          (b) If the Participant terminates his employment for Good Reason, the
     date specified in the Notice of Termination shall not be more than sixty
     (60) days from the date the Notice of Termination is given to the Employer.

                                  ARTICLE VI
                      ADDITIONAL PAYMENTS BY THE COMPANY

     6.1  Gross-Up Payment.  In the event it shall be determined that any
payment or distribution of any type by the Employer to or for the benefit of the
Participant, whether paid or payable or distributed or distributable pursuant to
the terms of this Plan or otherwise (the "Total Payments"), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
collectively referred to as the "Excise Tax"), then the Participant shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Participant of all taxes (including additional
excise taxes under said Section 4999 and any interest, and penalties imposed
with respect to any taxes) imposed upon the Gross-Up Payment, the Participant
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments.  The Company shall pay the Gross-Up Payment to the
Participant within twenty (20) business days after the Termination Date.

     6.2  Determination By Accountant.  All determinations required to be made
under this Article VI, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by the independent accounting
firm retained by the Company on the date of Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and the Participant within fifteen (15) business days of the Termination Date,
if applicable, or such earlier time as is requested by the Company.  If the
Accounting Firm determines that no Excise Tax is payable by the Participant, it
shall furnish the Participant with an opinion that he has substantial authority
not to report any Excise Tax on his federal income tax return.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Participant.  As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that a Gross-Up Payment which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder.  In the event that the Company
exhausts its remedies 

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pursuant to Section 6.3 and the Participant thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Participant.

     6.3  Notification Required.  The Participant shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.  Such notification
shall be given as soon as practicable but no later than ten (10) business days
after the Participant knows of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Participant shall not pay such claim prior to the expiration of the thirty-
(30) day period following the date on which it gives such notice to the Company
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Participant in
writing prior to the expiration of such period that it desires to contest such
claim, the Participant shall:

          (a) give the Company any information reasonably requested by the
     Company relating to such claim,

          (b) take such action in connection with contesting such claim as the
     Company shall reasonably request in writing from time to time, including,
     without limitation, accepting legal representation with respect to such
     claim by an attorney reasonably selected by the Company,

          (c) cooperate with the Company in good faith in order to effectively
     contest such claim,

          (d) permit the Company to participate in any proceedings relating to
     such claim, provided, however, that the Company shall bear and pay directly
     all costs and expenses (including additional interest and penalties)
     incurred in connection with such contest and shall indemnify and hold the
     Participant harmless, on an after-tax basis, for any Excise Tax or income
     tax, including interest and penalties with respect thereto, imposed as a
     result of such representation and payment of costs and expenses.  Without
     limitation on the foregoing provisions of this Section 6.3, the Company
     shall control all proceedings taken in connection with such contest and, at
     its sole option, may pursue or forgo any and all administrative appeals,
     proceedings, hearings and conferences with the taxing authority in respect
     of such claim and may, at its sole option, either direct the Participant to
     pay the tax claimed and sue for a refund, or contest the claim in any
     permissible manner, and the Participant agrees to prosecute such contest to
     a determination before any administrative tribunal, in a court of initial
     jurisdiction and in one or more appellate courts, as the Company shall
     determine; provided, however, that if the Company directs the Participant
     to pay such claim and sue for a refund, the Company shall advance the
     amount of such payment to the Participant, on an interest-free basis and
     shall indemnify and hold the Participant harmless, on an after-tax basis,
     from any Excise Tax or income tax, including interest or penalties with
     respect thereto, imposed with respect to such advance or with respect to
     any imputed income with respect to 

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     such advance; and further provided that any extension of the statute of
     limitations relating to payment of taxes for the taxable year of the
     Participant with respect to which such contested amount is claimed to be
     due is limited solely to such contested amount. Furthermore, the Company's
     control of the contest shall be limited to issues with respect to which a
     Gross-Up Payment would be payable hereunder and the Participant shall be
     entitled to settle or contest, as the case may be, any other issue raised
     by the Internal Revenue Service or any other taxing authority.

     6.4  Repayment.  If, after the receipt by the Participant of an amount
advanced by the Company pursuant to Section 6.3, the Participant becomes
entitled to receive any refund with respect to such claim, the Participant shall
(subject to the Company's complying with the requirements of Section 6.3)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).  If, after
the receipt by the Participant of an amount advanced by the Company pursuant to
Section 6.3, a determination is made that the Participant shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Participant in writing of its intent to contest such denial of refund prior to
the expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.

                                  ARTICLE VII
                             SUCCESSORS TO COMPANY

     7.1  Successors.  This Plan shall bind any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, in the same
manner and to the same extent that the Company would be obligated under this
Plan if no succession had taken place.  In the case of any transaction in which
a successor would not, by the foregoing provision or by operation of law, be
bound by this Plan, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.  Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach hereof and shall entitle the Participant to
compensation from the Company in the same amount and on the same terms as the
Participant would be entitled hereunder if the Participant terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Termination Date.  As used herein, "the Company" shall mean the
Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 7.1 or which otherwise becomes bound by all the terms and provisions
hereof by operation of law.

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<PAGE>
 
                                 ARTICLE VIII
                     DURATION, AMENDMENT, PLAN TERMINATION
                         AND ADOPTION BY SUBSIDIARIES

     8.1  Duration.  This Plan shall continue in effect until terminated in
accordance with Section 8.2.  If a Change in Control occurs, this Plan shall
continue in full force and effect, and shall not terminate or expire, until
after all Participants who have become entitled to a Severance Benefit hereunder
shall have received all of such benefits in full.

     8.2  Amendment and Termination.  The Plan may be terminated or amended in
any respect by resolution adopted by two-thirds of the Board; provided, however,
that no such amendment or termination of the Plan may be made if such amendment
or termination would adversely affect any right of a Participant who became a
Participant prior to the later of (a) the date of adoption of any such amendment
or termination, or (b) the effective date of any such amendment or termination;
and, provided further, that the Plan no longer shall be subject to amendment,
change, substitution, deletion, revocation or termination in any respect
whatsoever following a Change in Control.

     8.3  Form of Amendment.  The form of any amendment or termination of the
Plan shall be a written instrument signed by a duly authorized officer or
officers of the Company, certifying that the amendment or termination has been
approved by the Board.

     8.4  Adoption by Subsidiaries.  Any Subsidiary of the Company may, with the
approval of the Board of Directors of the Company, adopt and become an Employer
under this Plan by executing and delivering to the Company an appropriate
instrument agreeing to be bound as an Employer by all of the terms of the Plan
with respect to its eligible employees.  The adoptive instrument may contain
such changes and amendments in the terms and provisions of the Plan as adopted
by such Subsidiary as may be desired by such Subsidiary and acceptable to the
Company. The adoptive instrument shall specify the effective date of such
adoption of the Plan and shall become as to such adopting Subsidiary a part of
this Plan.

                                  ARTICLE IX
                                 MISCELLANEOUS

     9.1  Participant's Legal Expenses.  The Company agrees to pay, upon written
demand therefor by the Participant, all legal fees and expenses which the
Participant may reasonably incur as a result of any dispute or contest
(regardless of the outcome thereof) by or with the Company or others regarding
the validity or enforceability of, or liability under, any provision hereof
(including as a result of any contest about the amount of any payment pursuant
to Article IV), plus in each case interest at the "applicable Federal rate" (as
defined in Section 1274(d) of the Code). In any such action brought by a
Participant for damages or to enforce any provisions hereof, he shall be
entitled to seek both legal and equitable relief and remedies, including,
without limitation, specific performance of the Company's obligations hereunder,
in his sole discretion.

                                       13
<PAGE>
 
     9.2  Employment Status.  This Plan does not constitute a contract of
employment or impose on the Employer any obligation to retain a Participant as
an employee, to change the status of a Participant's employment as a Management
Group Employee, or to change any employment policies of the Employer.

     9.3  Validity and Severability.  The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     9.4  The Participant's Heirs, etc.  This Agreement shall inure to the
benefit of and be enforceable by the Participant's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If the Participant should die while any amounts would
still be payable to him hereunder as if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms hereof to his designee or, if there be no such designee, to his estate.

     9.5  Governing Law.  The validity, interpretation, construction and
performance of the Plan shall in all respects be governed by the laws of the
State of Texas.

     9.6  Choice of Forum.  A Participant shall be entitled to enforce the
provisions of this Plan in any state or federal court located in the State of
Texas, in addition to any other appropriate forum.

     9.7  Notice.  For the purposes hereof, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed to the Company at its
principal place of business and to the Participant at his address as shown on
the records of the Employer, provided that all notices to the Company shall be
directed to the attention of the Chief Executive Officer of the Company with a
copy to the Secretary of the Company, or to such other in writing in accordance
herewith, except that notices of change of address shall be effective only upon
receipt.

     IN WITNESS WHEREOF, Cross Timbers Oil Company has caused these presents to
be executed by its duly authorized officer on the 10th day of June, 1997.

                                       CROSS TIMBERS OIL COMPANY


                                       By:    /s/ ROBERT C. MYERS
                                              ---------------------------------
                                       Name:  Robert C. Myers
                                       Title: Vice President - Human Resources

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